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Original poster

Mortgage declined

38 replies

Theswaggyotter · 31/03/2018 09:52

We are remortgaging and applied for mortgage with first direct which was declined. Our credit check was fine but they were not willing to lend us the amount of mortgage we need - in fact they said they would only lend us £200k LESS than our existing mortgage. When we asked why they said our outgoings were too high.
We have more than £500 per month that is not spent so are a bit unsure what the problem was
So my question is are first direct more stringent than other lenders? It seems strange to have such a difference in what one lender is prepared to loan compared to another. Would we be better to go through a mortgage broker who might be able to find a lender who will actually be willing to lend the amount we need?
Thanks for reading

OP posts:
scurryfunge · 31/03/2018 09:56

Definitely go to a mortgage broker. They do all the hard work of finding a suitable lender.

Catatlarge · 31/03/2018 09:56

(Let’s call it £500 to make it easier) Would remortgaging making that £500 drop considerably? It’s not just about what money you have left, it’s what % of income it would use for the loans.

If you have £500 left now, that’s not actually a lot of money (ok yes I know lots of people have 0 money left at the end of the month before you jump on me)
What happens if your boiler breaks suddenly. Or you crasha. Car and have to pay excess. Savings? They look at it as a total

nellly · 31/03/2018 10:02

I just remortgage and despite having around 700'surplus only just scraped through!! They stress tested what would happen if mortgage rates went up to 11%!! So my tiny mortgage of 450 went to 1100... i think it's a very tough time to get approved. That was Yorkshire Bank. I would defo approach a mortgage broker

inamechangedforthispost · 31/03/2018 10:12

Definitely use a broker. They will know from the information given which lender is the most likely to accept your circumstances.

'Hard' searches on your credit history can temporarily have a negative impact so I wouldn't do any more applications yourself.

As a pp mentioned though, even if taking out a fixed rate mortgage, your application will be stress tested. FD are quite a tough/picky lender.

Sallycinnamum · 31/03/2018 10:19

First Direct have a very strict lending criteria. We've recently remortgaged with them and it was a very involved and lengthy process.

I know of several people who have been turned down by FD.

Oblomov18 · 31/03/2018 10:33

We have just used a broker, he said direct line are notoriously strict.

he got us the best deal with HSBC, we finally decided to go for their 10 year deal, rather than their 5 year deal - that he said most of his clients couldn't get because they don't fulfill the criteria. Don't mean to sound boastful, and believe me we are completely ordinary : Dh full time average job, me part time job.
So it was just very unusual for this kind of good luck to happen to us!!

Oblomov18 · 31/03/2018 10:34

Sorry I mean first direct are notoriously stringent.

Original poster
Theswaggyotter · 31/03/2018 10:57

Ok thanks for the replies it makes me feel a bit better to know they are stringent and it’s not just us!
I’ve heard of London and country being good brokers, anyone used them??

OP posts:
MyDcAreMarvel · 31/03/2018 11:00

Yes we used L and C they were great, couldn’t fault them.

LoveManyTrustfew · 31/03/2018 11:14

We are with FD.

Even in this slow market we would get £600 k for the house.

We owe 11k on our mortgage, our joint income after tax is £5,500 ( I work part time) We wanted to borrow a further £25 k to do the kitchen and bathroom and have wriggle room for all the extra jobs that crop up.

Bearing in mind we can clear this in about three years they made out like they were doing us a massive favour.

I felt like telling them to poke it, but it was a great deal and I am lazy.

But yes they are a pain in the arse.

QuiteLikely5 · 31/03/2018 11:22

Oblinov

How can you say you got the best rate deal with hsbc when there 10 year fixed is double most other rates that start at 1%?

Op

Definitely try a broker

GreenSeededGrape · 31/03/2018 11:31

Another one recommending L&C. When we bought I was on a EEA spousal visa and no one would lend to me. L&C found us a great deal but we had to have a 15% deposit instead of the 10% we thought.

Original poster
Theswaggyotter · 31/03/2018 11:59

love do you mean you owe 110k on mortgage rather than 11k? Otherwise wouldn’t be worth having mortgage?

FD were really weird, asking take home pay, then asking what my pension was which makes me wonder if they took pension off my take home which would make a huge difference! Also asked about childcare vouchers and I wonder if she took that off as well even though that’s pre tax.
It’s just such a huge discrepancy! There online mortgage thing also said we could borrow more than 200k more.

Also when she asked about outgoings she wanted the full costs including all the ‘luxury’ / treats eg eating out, holidays, birthday costs which we gave her (we’ve got a detailed budget planner including costs of lots of extras) but if we were in financial trouble that’s all the stuff we would stop/reduce to make up the shortfall Confused

Anyway there’s no point challenging them on this as I’m sure they would still say no!

OP posts:
LoveManyTrustfew · 31/03/2018 12:08

I mean we only owe £11,000 we are borrowing the additional money because we were going to start saving for the kitchen and bathroom and then DH pointed out that it would be nearly paid for by the time we had saved up enough and we would have the pleasure of looking at them.

LoveManyTrustfew · 31/03/2018 12:11

They asked the most ridiculous questions.

DH had a bonus last week and are going to reduce the balance even further, in fact I am going to take great delight in reducing down to a silly monthly repayment between now and the time the product expires. Grin #petty.

LoveManyTrustfew · 31/03/2018 12:13

DH has just reminded me that they wanted to know how much we had in pension pots, not how much we paid into them, but what they were worth, despite the fact that the borrowing will be paid back two years before his retirement.

Original poster
Theswaggyotter · 31/03/2018 12:18

That’s probably why they were funny about it then love as they know they won’t make much money out of you with a mortgage that small!!

OP posts:
FayKnights · 31/03/2018 12:21

Definitely go with a broker, we used a police specific one due to DH job, they were excellent, you shouldn’t have to pay a broker either. They make money from the mortgage provider.
When we tried to remortgage ourselves with HSBC (who I have banked with for 25 years) it was a nightmare. As soon as we said the mortgage would be paid off in 3 years time with a lump sum they were not interested.
It’s crazy, we could show that the payments were affordable when stress tested and when the lump sum would be received.
Anyway, good luck and don’t get too disheartened. You’ll get there.

3bears88 · 31/03/2018 12:35

Hi,

I don't normally comment on things but I'm a mortgage advisor so thought I could cast a light on this one. Lenders work on a 'stress test so basically could you continue to afford your mortgage if interest rates increase to the highest they have been in 20 years. It was a directive brought in by the FCA as there were millions of people who couldn't afford their mortgage becausr interest rates had increased. They also have to take into account the financial dependants you have, the commitments you already pay out each month as well as using a national average for utility bills. I appreciate you say there is £500 left over each month but a lender will never usr every penny of your disposable income, what if your washer breaks or your car fails the MOT one month, if there's nothing left after your mortgage payments you won't be able to afford to fix it. After the crash and all those people lost their houses all lender have to look at worse case scenario. Some are more extreme than others obviously.
In regards to brokers yes they will find a mortgage for you but they charge you for the privilege or get a procuration fee from the lender which sometimes means u pay a higher rate of interest or a product fee. They wont get you anything you can't get yourself by shopping around.
Your current providers lender criteria may have changed since you took your mortgage out, your commitments may be different, did you have the seen numbers of kids you have now when you took it out, have you reduced your hours/income decreased since then. All there things will affect the amount they can responsibility lend to you.
My gut feeling would be that if a broker can get you a substantially larger mortgage then your being offered else where.....why? Do some digging. I have pretty jaded view of brokers as I often have to sort issues out on existing mortgages set up by them as they have been done wrongly. I'm sure there are good ones out there thought I don't want to tarnish all with the same brush.
Good luck

Original poster
Theswaggyotter · 31/03/2018 13:52

Hi 3bears thanks for taking the time to reply.
We were hoping to change to different lender. Our finances are a bit better than they were before (we had 2 preschoolers then, now one, soon to be none when youngest starts school in August)
I think the problem was our budget planner which accounts for every expense eg includes £1000 per year for unexpected car maintenance, £1000 per year household maintenance etc and we gave our outgoings as including all of that, as she said to include everything we spend/budget for.

I’ve redone our budget planner taking out everything except essentials (bills, insurance, council tax, mortgage etc)and it means we have £2500 each month left over instead of £500.

We do have a big mortgage but we are both high earners and one persons wage more than covers the mortgage.
That’s why I was so Confused but if they had just asked for committed essentials our numbers would have come out much more in our favour and shown that with stress testing we can still afford it.
It feels like we told them our actual costs, down to every last penny and they’ve added a whole lot more on for ‘ unexpected expenses’ not realising we are already budgeting for this!
Lesson learnt on that one

OP posts:
Fundays12 · 31/03/2018 22:41

First direct are stricter in my view but your best to go to a mortgage broker. Some companies rules are just beyond ridiculous one would not even consider us as we couldn’t afford a £80k mortgage apparently. We currently have a £99k mortgage which we overpay on every month and most months have £300 going into our savings account plus live very comfortably.

Fundays12 · 31/03/2018 22:45

I have suggested a mortgage broker but 3bears88 has given you a lot of good advice. I personally would say if you use a mortgage broker get one who has an excellent reputation. I have heard some real horror stories from people that went to mortgage brokers because one person said the were good. You want lots of people to say there excellent.

inamechangedforthispost · 01/04/2018 00:12

The problem in doing it yourself (as you've discovered) is that you do not and will not know the details of individual lenders assessment criterion.

Get it wrong and you will damage your credit history as if you keep reapplying you will have hard searches on your file.

A good broker will know where to place your case. Some rates are only available through brokers and you don't always have to pay them upfront. Some brokers get a commission from the lender but it doesn't affect the rate you pay. Once your broker has advised which product suits you, you can easily confirm it's the published rate and not an inferior one.

KanielOutis · 01/04/2018 08:12

I think it's so hard to get a mortgage these days. I applied for £15k for home improvements. I am 30, with 8 years left on the mortgage and I was declined. Their reason was they only count child benefit while the children are minors and I don't need the affordability criteria with wages alone. Fair enough, but it wouldn't have been a struggle to meet the repayments.

user1471530109 · 01/04/2018 08:22

OP I had a nightmare with HSBC. Had been with them 12 years or more (mortgage. Bank account 25 years) and they really ummd and arrred over it. Despite them saying yes and even offering more at the first stage. I've heard HSBC and first direct are particularly bad. I had over £1000k a month unaccounted for. So I was furious when they questioned my affordability. They too took my pension off and increased my bills. Have a look online at your application. This is how I found out. I made a massive complaint and the complaints person who called me was really rude. I was offered £250 which I refused as I had just lost the house sale.

I told all my friends about it to warn them off at the time. When I need to renew again, I won't be using them. I made another complaint about the man who spoke to me. At one point he accused me of lying! Despite the fact I had it all in writing from them. Knob head. I never did hear anything back and I had so much going on at the time I didn't chase it. Stay away is my advice.

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